Tag Archives: benefit

Lawmakers Approve Changes to State Retirement System

The House has approved and sent to the governor for his signature a bill that changes the pension system for state employees and teachers hired after July 1, 2014.
Drafted by state Treasurer David Lillard, SB1005 would create what is described as a “hybrid” between the present defined-benefits plan, which guarantees retirees a fixed pension based on years of service and earnings, and a defined-contribution plan, which has no guaranteed benefit level.
The bill passed the Senate 32-0 and won 71-16 approval in the House. All no votes came from Democrats.
Explaining his no vote, House Minority Leader Craig Fitzhugh praised the proposal as well designed, but said it is simply not needed in Tennessee because the state retirement system has adequate funding — unlike those in many other states.
But Lillard and sponsors of the bill — Sen. Randy McNally, R-Oak Ridge, and Steve McManus, R-Cordova — said long-range projections show the Tennessee Consolidated Retirement System could face problems and the legislation will head them off, without affecting current state workers and teachers.

Andrea Zelinski has details on the legislation:

Continue reading

Audit Finds More Than $73 Million in Unemployment Benefit Overpayments

News release from state comptroller’s office:
The $1.2 billion unemployment insurance program administered by the state’s Department of Labor and Workforce Development has made overpayments exceeding $73 million due to fraud and errors over the last six years.
State auditors found that the department’s internal controls for the program were ineffective or non-existent, resulting in overpayments of claims due to fraud or error. The department’s efforts to review fraudulent claims and claims paid in error and to collect overpayments were also strained. The department has only been able to collect 23 percent of the overpayments on average.
In addition, those citizens who were actually eligible for benefits did not receive them in a timely manner. Due to increased backlogs in the department’s claims process, some benefit payments were delayed for those who needed help.
Those are among the findings of the state’s Single Audit Report, which was released today. The Single Audit Report is an annual audit of state agencies and universities’ compliance with federal requirements. The new report, covering the fiscal year that ended June 30, 2012, examines more than $15.9 billion of federal funds spent by state government.
In all, the report contains 48 findings with recommendations for improvement at 11 different state agencies and universities. The Department of Labor and Workforce Development was the subject of 12 of those findings, including the ones related to the unemployment insurance program.
State auditors concluded that management’s failure to properly administer this state/federal program jeopardizes the integrity and future viability of the program.
“The state’s unemployed citizens must be able to rely on the Department of Labor and Workforce Development officials to properly administer the unemployment insurance program and provide critical benefits to those who are dependent on them,” Comptroller Justin P. Wilson said. “The new acting commissioner of the department has responded and initiated a corrective action plan to strengthen controls and establish program oversight. We appreciate the new commissioner’s prompt action as well as the former commissioner’s request for a review of specific allegations when she identified fraud risks within the department.”
To view the Single Audit Report online, go to:

Lillard Outlines Plans to Change State Pension System

By Lucas Johnson, Associated Press
NASHVILLE, Tenn. (AP) — Tennessee’s treasurer said Monday that he wants to overhaul the state’s public retirement system to cut costs and ensure it can pay out benefits for years to come.
David Lillard said he will propose legislation laying out the overhaul, even though Tennessee’s public pension system is faring better than those in most other states. Changes to the Tennessee Consolidated Retirement System will only apply to state employees, higher education officials and teachers hired after July 1, 2014, Lillard said at a news conference. The retirement benefits of those currently in the system won’t be affected.
The state is doing better than its peers with similar plans, but earnings of the Tennessee plan have fallen short of expectations over the past several years, he said. The changes are needed because it’s uncertain how much money the retirement system’s investments will yield in the future, Lillard said.
He said that in 2003, taxpayers spent about $264 million a year to support the system. As of last year, that number had grown to $731 million, he said.
“Based on projections we have seen, the cost could go up by one-third or more over the next 10 years if changes aren’t made, which would push the taxpayers’ total annual expense above $1 billion,” said Lillard, adding that at least 45 states have enacted some type of pension reform in the past few years.

Continue reading

On Haslam and His Hometown Ties

Gov. Bill Haslam doesn’t live in Knoxville anymore, but still considers it home and says that his hometown ties may provide some indirect benefit to those still living there.
“I love my job and we like being in Nashville,” he said. “But if people ask me where I’m from, I say I’m from Knoxville.”
He and his wife, Crissy, live in the state-owned executive residence in Nashville, which went through major remodeling and renovation initiated by his predecessor, former Gov. Phil Bredesen. But for legal purposes, including voting, he maintains his official residence in Knoxville.
Haslam visits the city he served as mayor fairly often — though not as much as he would like, he said in an interview.
A review of the governor’s public schedule indicates that Haslam’s trip to Knoxville to vote on Friday, Oct. 26, was the 41st publicly announced appearance at an event in Knox County since his inauguration on Jan. 15, 2011.
For comparison, Haslam has had 38 events in Shelby County at the other end of the state during the same time period. His wife, Crissy, grew up in Memphis and still visits family members there “as often as they can,” according to a spokesman.

Continue reading

‘Greenbelt’ Law Benefiting TN Millionaires, including Bredesen, Frist, Hyde

The News Sentinel and the Commercial Appeal, in a joint review of “Greenbelt Law” records, report some of the state’s wealthiest individuals are getting big tax breaks under a program designed to help farmers preserve their land for agriculture.
The 1976 Agricultural, Forest and Open Space Land Act, or “Greenbelt Law,” is subsidizing estates and hobby farms of business icons such as AutoZone founder J.R. “Pitt” Hyde, a Memphis multimillionaire, and some of the biggest names in country music, Wynonna Judd among them. Former University of Tennessee football coach Phillip Fulmer qualifies by baling hay on his $2.8 million, 47-acre Maryville estate.
Generous farm and forest tax breaks are in force for estate after estate along Nashville’s tony Chickering Road, though official paperwork at the Davidson County Assessor’s Office at times provides little evidence of how the properties qualify. Among the recipients: former Tennessee Gov. Phil Bredesen, a wealthy health care entrepreneur; and billionaire Thomas Frist Jr., co-founder of Hospital Corp. of America.
Even Knoxville’s private Cherokee and Holston Hills country clubs have been sheltered under the “open space” provision of the law.
In some instances, the law is actually subsidizing the land speculation it was created to combat.
In 2009, for example, Shelby County’s Johnson cut 97 percent from the value of an East Memphis field for sale for commercial development and surrounded by a 127-room Hyatt Place Hotel, ServiceMaster offices and a strip shopping center. Annual taxes on the $2.99 million, 65-acre site owned by Forest Hill Associates loomed at more than $48,000 if taxed at fair market value, yet fell to less than $1,000. Now, an apartment complex is under construction there.
“We’ve done what’s right within the law,” said co-owner Charles Wurtzburger.
Maybe so, with many saving big on this huge break many others are carrying the tax load.

Haslam Punts to Feds on Deciding ‘Essential Benefits’ Under Obamacare

Republican Gov. Bill Haslam has washed his hands of choosing what benefits will be required in basic health insurance plans sold to individual Tennesseans and small businesses under the federal health care law, reports Andy Sher.
In deciding not to act, Haslam has turned over to the Obama administration a decision that will affect hundreds of thousands of people and small companies.
A number of Republican and some Democratic governors in other states have done the same. Unlike many, Haslam hasn’t shared anything with the general public, instead serving notice of his decision in a letter dated Sunday to U.S. Health and Human Services Secretary Katherine Sebelius.
In it, the governor criticizes the 2010 Affordable Care Act and says that after months of reviewing what he complained was vague federal guidance, “I have decided not to select such a plan for Tennessee.”
The deadline for states on how they will define “essential health benefits” was Monday. But some observers question how hard a deadline that actually is.
A copy of Haslam’s letter to Sebelius and other HHS officials was obtained by the Times Free Press.
In its efforts to extend health coverage to most Americans, the law requires private health insurers selling policies to individuals and smaller businesses to begin offering in 2014 the “essential health benefits” package comprising 10 categories.
The list includes hospitalization, emergency care, maternal care and prescription drugs.
Federal officials limited choice of so-called “benchmark” benefit plans to one of several options. They include selecting one of the three largest plans covering small businesses, state employee plans, in-state federal employee plans or the largest health maintenance plan serving commercial customers.
According to a list of “frequently asked questions,” HHS last year said if states don’t select an essential health benefits plan, the “default” benchmark plan “would be the largest small group market product in the State’s small group market.”
That would appear to be in Tennessee the small group plan benefits offered by Chattanooga-based BlueCross BlueShield of Tennessee, although HHS qualifies that by saying anything lacking could be picked up from the next largest plan. (Note: See also The Tennessean, which says the BlueCross plan will probably be the benchmark.)
Haslam spokesman David Smith and state Commerce and Insurance Department spokesman Christopher Garrett refused to comment directly on BlueCross, saying only the decision is now up to the federal government.
Smith said Haslam still hasn’t decided whether to participate in creating the law’s anticipated health care exchanges that will give hundreds of thousands of uninsured Tennesseans the opportunity to find coverage. The deadline for that, which could be left to the federal government too, is Nov. 17.
Haslam also hasn’t decided on another provision that would extend Medicaid coverage to as many as 300,000 or so low-income Tennesseans. The Medicaid program in Tennessee is operated as TennCare. The essential health benefits plan would control what type of plans any would-be new enrollees see.

Gift Tax Repeal a Gift for Haslam Family

A bill repealing the state gift tax is expected to put more money in some Tennesseans’ pockets including those of one highly recognizable taxpayer, Gov. Bill Haslam.
Marc Perrusquia explains:
The super wealthy businessman-turned-politician gave his tacit approval this spring as fellow Republicans pushed the bill through the General Assembly. Passed by the House and Senate on the final two days of the session, it now goes to Haslam, who’s expected to sign it.
The new law, which eliminates the 5.5- to 16-percent graduated tax on gifts, could create a windfall for Haslam, whose family owns Pilot Flying J, a nationwide chain of convenience stores and truck stops ranked as one of the most lucrative private companies in the country.
Haslam transfers Pilot stock to his three grown children, but to avoid gift taxes he sells those shares rather than give them away. The arrangement, which generates about $1.1 million a year in income to Haslam, costs less in income taxes than it would to pay gift tax by giving shares to his kids, Haslam’s CPA, J. Todd Ellis, said in a 2010 interview.
While the cuts may be good for well-off individuals such as Haslam, some Democrats argue they are bad for the state. Eliminating the gift tax will cost Tennessee $15 million a year in revenue while a related measure passed this session — the phasing out of the inheritance tax by 2016 — will cost the state another $94 million a year.
“I didn’t see a need to give up that (gift tax) revenue,” said Sen. Douglas Henry, D-Nashville, one of three senators and 10 representatives — all Democrats — who voted against eliminating the gift tax.
Rep. Charles Michael Sargent, R-Franklin, sponsor of both bills in the House, said although the measures will cost the state revenue, lower taxes will help the economy by increasing consumer and business spending power.
“This is just another way we’re looking at reducing taxes in the state of Tennessee,” Sargent said. “Republicans just believe this is the way to go. It brings in more business, which in turn brings in more revenue.”
Haslam did not agree to an interview for this story.
The governor’s spokeswoman, Alexia Poe, said in an e-mail that eliminating the gift tax “wasn’t part of his legislative agenda this year,” yet “he is comfortable” with the decision. Haslam proposed raising exemptions to the inheritance tax before legislators moved to phase it out altogether.
“Federal tax policy drives financial planning and estate planning decisions. The main impact of state tax policy on those decisions is where people are going to live,” Poe said. “The governor doesn’t consider living anywhere else but Tennessee, so the elimination of the gift tax here won’t impact his planning decisions.”
Nonetheless, he should benefit from the tax cuts.
…The law change eliminates any “transfer by gift” made after Jan. 1, 2012.
Previously, the state charged taxes of any gift greater than $13,000 per tax year if the gift was made to an immediate family member including a spouse, child or sibling. Taxes were charged on gifts greater than $3,000 if the gift was made to someone other than an immediate relative.
Ellis, Haslam’s CPA, explained in a 2010 interview that Haslam employs a sophisticated mechanism to avoid gift taxes when transferring Pilot stock to his children, Will, Annie and Leigh.
Under the arrangement, Haslam sells stock to trust funds set up for the benefit of each child. Haslam holds a loan note to finance the sales. Each of the three trusts pays Haslam $358,000 a year through an amortized schedule to finance the stock sales, Ellis said. The CPA said at the time income taxes on the transactions were less than gift taxes Haslam would have paid if he’d given the shares away, yet he provided no additional details.
Bucking a long tradition among gubernatorial candidates, Haslam declined to release tax returns that might detail the arrangement and other financial transactions.
Under the state’s now-repealed gift tax, a $300,000 gift to a relative could have cost $26,000 in state gift taxes alone. Any federal gift taxes would come on top of that.
But by selling stock to his children Haslam could have minimized taxes, said Taylor, a partner at Pelletier, Chase & Associates in Portland, Maine, where she is a business and tax adviser. That’s because only the profit — or the capital gain — is taxed in a stock sale. Haslam could further limit gift taxes by giving the stock sale a low value, limiting his gain, Taylor said

Audit Finds Oak Ridge Utility Manger Helped Himself

News release from state comptroller’s office:
The Oak Ridge Utility District’s general manager used his position for personal benefit on more than one occasion, an investigation by the Comptroller’s Division of Municipal Audit has revealed.
Also, the district paid travel expenses for two employees and their spouses to go on a trip to Rome, although they performed no work-related duties during that trip.
The general manager bought a damaged skid steer, a machine which had been used by the district for loading and digging. After he bought parts to repair the skid steer, he then ordered the district’s mechanic to repair the machine at the district’s shop, using district tools and materials, before taking the equipment home for his personal use.
The district also paid $463 to add a subscription to XM satellite radio in a Chevrolet Tahoe purchased for the general manager’s use. The $38,820 vehicle’s amenities included an off-road package, heated leather seats and a premium sound system – all of which were required to meet the district’s minimum bid specifications for the vehicle.
Investigators determined that two district employees and their spouses went on a three-day trip to Rome at the district’s expense. The trip was organized in conjunction with the East Tennessee Natural Gas Homebuilders program, a promotional effort intended to encourage homebuilders to provide natural gas hookups in the homes they build. Investigators could determine no business purpose for utility district employees to travel to Rome three days before a homebuilders’ trip was set to begin, much less accompany the homebuilders on a Mediterranean cruise.
“It is important for utility district officials to remember that the money they receive from customers is still public money,” Comptroller Justin P. Wilson said. “Therefore, it should be treated as such. Using district funds for personal gain is certainly no way for district officials to endear themselves to their ratepayers.”
To view the report online, go to: http://www.comptroller1.state.tn.us/Repository/MA/Investigative/oakridgeud.pdf

New Law Corrects ‘Injustice’ to One Retired State Employee

While Tennessee’s Constitution says that the Legislature has no power to enact a law for the benefit of a “particular individual,” Public Chapter 405 this year apparently did just that for an Oak Ridge man.
“This bill is to correct an injustice,” said state Rep. John Ragan, R-Oak Ridge, in his initial presentation of the proposed legislation, then known as HB719, to a House subcommittee.
A review of recordings during the legislative proceedings shows the constitutional provision came up for discussion, but lawmakers ultimately decided that it could be appropriately bypassed to the benefit of James D. Harless, 67.
The bill passed on the House and Senate floors unanimously on the last day of the 2011 legislative session and was signed by Gov. Bill Haslam on June 6.
As a result, Harless, who was never named during the legislative proceedings, says he is receiving “around $31,000,” the first $14,000 paid July 1 into his 401k shortly after his retirement as an employee of the Department of Environment and Conservation.

Continue reading